October 25, 2011Essential Health Benefits and State Mandated Benefits -- At What Cost?

(Alexandria, VA) – The Council for Affordable Health Insurance (CAHI) calls on the U.S. Department of Health and Human Services (HHS) to follow the recommendations of the Institute of Medicine (IOM) regarding coverage of state mandated benefits as “essential health benefits” under the federal health care reform law.

The IOM’s recently issued recommendations state “current state mandated benefit laws should not automatically be included in the essential health benefits package…but should be reviewed in the same manner as other potential health benefits.” This message is consistent with what CAHI has espoused for the past two decades.

The IOM also recommends that included essential benefits “protect against the greatest financial risks due to catastrophic events or illnesses.” Many state mandated benefits do not meet this criterion. They impose additional costs which make health insurance less affordable for everyone.

A health insurance mandate requires a policy to cover specific health care providers, benefits or patient populations. While mandates make health insurance more comprehensive, they also make it more expensive. Mandates require insurers to pay for care consumers previously funded out of their own pockets and require consumers to pay for benefits they might never use.

“According to our study, Health Insurance Mandates in the States, the number of mandated benefits continues to grow -- to 2,156 nationwide, up from 2,133 last year,” reported Victoria Craig Bunce, CAHI Research and Policy Director. “We track hundreds of mandate bills each year and identify those which actually pass. The study also includes an estimate, provided by a team of health actuaries, of how much each mandate adds to the cost of a health insurance policy.”

"Policymakers are increasingly focused on how to reduce the number of uninsured Americans and lower the cost of health insurance," stated CAHI State Affairs Director Kevin Wrege. "While some legislators continue to pass new mandate laws, others recognize that mandates drive up the cost and make coverage unaffordable for millions of Americans. As implementation of the new federal reform law further drives up premiums, the cost of adding mandated benefits in the essential benefit package will become an important issue.”

“The IOM report is encouraging, but there is no guarantee HHS will abide by the recommendations. In the interim, CAHI will continue to track mandated benefits at the state level. Our next mandate report will be released in January,” Bunce added.